United States energy giant Apache Energy is poised to offload its 49 per cent stake in the ammonia company formerly known as Burrup Fertilisers in a deal that could be worth in excess of $US400 million.

The potential bidders include 51 per cent shareholder Yara International,
Incitec Pivot
and Agrium. Sources confirmed to The Australian Financial Review that potential buyers were being approached by Apache representatives.

The sales process comes less than 10 months after Apache bought into the company, now called Yara Pilbara, raising questions over the energy giant’s motives in its rapid buy-and-sell manoeuvre.

The downstream processing company was co-founded by fallen fertiliser tycoon Pankaj Oswal to use natural gas in the Pilbara to produce the fertiliser ingredient ammonia.

Explosives maker
Orica
and joint venture partners are constructing a plant next door to the ammonia factory to produce the essential raw material of explosives, technical ammonium nitrate.

Orica would also be expected to be approached during the sales process, which is being run by Citigroup.

The fertiliser company was valued at $US893 million earlier this year, after Yara paid $US143 million to increase its stake from 35 per cent to 51 per cent.

The carve up of the Pilbara operations came about after Mr Oswal, who with his wife controlled 65 per cent of Burrup Fertilisers, lost control of their stake to receivers in 2010.

Related Quotes

Company Profile

Their lender,
Australia and New Zealand Banking Group
, accused Mr Oswal of stripping money out of the company for personal gain; a charge that the Indian-born entrepreneur has consistently denied.

The business was valued at up to $2.8 billion in 2008, before financial irregularities tied to Mr Oswal started to undermine valuations attached to the business.

Mr Oswal and his wife Radhika now reside overseas. The Australian Taxation Office has claimed a tax debt against Mrs Oswal of $186 million, which she disputes.

Apache, which had supplied gas to the facility since it opened in 2006, emerged as a surprise bidder last year because it was in dispute with Burrup over gas contract prices crucial to the plant’s operations at the time.

Apache was the only bidder able to give certainty over prices and subsequently secured a 49 per cent stake. The court actions have been pulled.

Apache Energy Limited managing director Thomas Maher told US shareholders in February that: “This new ownership structure will stabilise the Burrup project after a period of significant uncertainty, and secure a long-term economically viable market for our natural gas production in Western Australia."

In May, Yara, Orica and Apache approved the development of the 330,000 tonne a year ammonium nitrate plant next door to the operating ammonia plant.

Orica chief executive Ian Smith said in August that the company had already signed up customers for 60 per cent of the capacity, despite questions over whether the market needed the extra supplies in a volatile period for mining companies.